The Relationship between Political Connections and Agency Costs Considering the Moderating Role of Audit Quality

Although establishing and retaining the relation with government are usually subject to acquiring the competitive but in markets with poor regulatory frameworks, this relationship can lead to the agency problem and costs associated with it. So, the purpose of the present research is the study of the relationship between the political connections and the agency costs due to the moderating role of audit quality in listed companies in Tehran Stock Exchange between the years 2013 to 2017. In order to conduct this research, a sample consisting of 128 companies was selected. The hypothesis of this research were tested by using multi-variable regression and implementing Panel Data technique.  The findings demonstrated that there is a significant relationship between political connections and agency costs, and also audit quality modifies the relationship between political connections and agency costs.